Essays in Honor of John Dunning
Edited by H. Peter Gray
Chapter 8: Financial versus Industrial Firms in Industrial and Regional Restructuring
8. Financial versus industrial ﬁrms in industrial and regional restructuring Ann Markusen A rich literature on industrial restructuring emerged in the last two decades of the 20th century. Work on particular industries – ensembles of ﬁrms which compete in distinctive product and service lines – helped us understand how auto, steel, machining, and various service industries locate, invest, expand, hire, ﬁre, relocate, and close (e.g. Massey and Meegan, 1978; Bluestone and Harrison, 1982; Markusen, 1999a). A complementary literature explored the regional development implications of ﬁrm strategies within this process, and among regional scientists and economic geographers, studying ﬁrm behavior as key to regional development became widespread (Schoenberger, 1991; Healey and Rawlinson, 1993; Markusen, 1994). Yet by and large, these accounts were unable to investigate ﬁrms’ internal workings to explore internal hierarchies and struggles between and among managers with conﬂicting missions, some of which bear on spatial outcomes. An exception is Schoenberger’s (1997) intriguing study of Lockheed’s California operations in the early postwar period. Nor do these accounts pay much attention to the relationship between ﬁnancial and industrial ﬁrms, with their quite diﬀerent proﬁt calculus. Furthermore, the interactions between these types of ﬁrms and the state remain seriously neglected, despite ample evidence in case studies of industries and individual ﬁrms that state regulation and subsidies are powerful shapers of ﬁrms’ locational calculus and that ﬁrms spend considerable resources attempting to inﬂuence them. The central argument of this chapter is that ﬁnancial ﬁrms, seeking short-term returns, may induce economic and...
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